<PAGE>
EXHIBIT 10.1
$325,000,000
MOVIE GALLERY, INC.
(a Delaware corporation)
11% Senior Notes due 2012
PURCHASE AGREEMENT
April 25, 2005
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April 25, 2005
Wachovia Capital Markets, LLC
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CIBC World Markets Corp.
c/o Wachovia Capital Markets, LLC
One Wachovia
Center
301 South College
Street
Charlotte, North
Carolina 28288
Ladies and Gentlemen:
Movie
Gallery, Inc., a Delaware corporation (the "Company"), proposes
to
issue and sell to the several purchasers
named in Schedule I hereto (the
"Initial Purchasers"), for whom Wachovia
Capital Markets, LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and
CIBC World Markets Corp. are acting as
Representatives (in such capacity, the
"Representatives"), $325,000,000
aggregate principal amount of its 11%
Senior Notes due 2012 (the "Notes"), which
will be unconditionally guaranteed on a
senior basis as to principal, premium,
if any, and interest (the "Guarantees") by
the subsidiaries of the Company named
in Schedule II hereto (each individually, a
"Guarantor" and collectively, the
"Guarantors"). The Notes will be issued
pursuant to an Indenture (the
"Indenture") dated as of the Closing Date
(as defined in Section 2) among the
Company, the Guarantors and SunTrust Bank,
as Trustee (the "Trustee"). This
Agreement, the Registration Rights
Agreement, to be dated the Closing Date,
between the Initial Purchasers and the
Company (the "Registration Rights
Agreement") and the Indenture are
hereinafter collectively referred to as the
"Transaction Documents" and the execution
and delivery of the Transaction
Documents and the transactions contemplated
herein and therein are hereinafter
referred to as the "Transactions".
The Notes
(and the related Guarantees) will be offered and sold through
the Initial Purchasers without being
registered under the Securities Act of
1933, as amended (the "Securities Act"), to
qualified institutional buyers in
reliance on the exemption from registration
provided by Rule 144A under the
Securities Act, and in offshore
transactions in reliance on Regulation S under
the Securities Act ("Regulation S"). The
Initial Purchasers have advised the
Company that they will offer and sell the
Notes purchased by them hereunder in
accordance with Section 3 hereof as soon as
the Representatives deem advisable.
In
connection with the sale of the Notes, the Company has prepared
a
preliminary offering memorandum, dated
April 15, 2005 (the "Preliminary
Memorandum") and a final offering
memorandum, dated the date hereof (the "Final
Memorandum" and, with the Preliminary
Memorandum, each a "Memorandum"). Each
Memorandum sets forth certain information
concerning the Company, the Notes, the
Transaction Documents and the Transactions.
The Company hereby confirms that it
has authorized the use of the Preliminary
Memorandum and the Final Memorandum,
and any amendment or supplement thereto, in
connection with the offer and sale
of the Notes by the Initial Purchasers.
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1.
Representations and Warranties of the Company and the Guarantors.
The
Company and the Guarantors (other than
Hollywood Entertainment Corporation
("Hollywood") and Hollywood Management
Company (collectively, the "Hollywood
Guarantors")) jointly and severally
represent and warrant to, and agree with,
each of the Initial Purchasers that:
(a) The Preliminary Memorandum does not contain, and the Final
Memorandum, in the form used
by the Initial Purchasers to confirm sales
and on the Closing Date, and any
amendment or supplement thereto does not
and will not contain any
untrue statement of a material fact or omit to
state any material fact
necessary to make the statements therein, in light
of the circumstances under
which they were made, not misleading; provided,
however, that the
representations or warranties set forth in this
paragraph shall not apply to
statements in or omissions from either
Memorandum made in reliance
upon and in conformity with information
furnished in writing to the
Company by the Initial Purchasers expressly
for use therein, as
specified in Section 11. The statistical and industry
data included in each
Memorandum are based on or derived from sources that
the Company believes to be
reliable and accurate.
(b) The Company has been duly organized and is validly existing as
a
corporation in good standing
under the laws of the State of Delaware. The
Company is duly qualified to
do business as a foreign corporation and is
in good standing under the
laws of each jurisdiction in which the conduct
of its business or its
ownership or leasing of property requires such
qualification, except where
the failure to so qualify or be in good
standing would not have a
Material Adverse Effect. "Material Adverse
Effect" shall mean a
material adverse change in or effect on or any
development having a
prospective material adverse effect on (i) the
business, operations,
properties, assets, liabilities, stockholders'
equity, earnings, condition
(financial or otherwise), results of
operations or management of
the Company and its subsidiaries or Hollywood
and its subsidiaries, as
applicable, considered as one enterprise, whether
or not in the ordinary
course of business, or (ii) the ability of the
Company and each Guarantor
to perform its obligations under the Notes or
the Transaction
Documents.
(c) The Company and each Guarantor has full power (corporate and
other)
to own or lease its
properties and conduct its business as described in
each Memorandum; and the
Company has full power (corporate and other) to
enter into the Transaction
Documents and to carry out all the terms and
provisions hereof and
thereof to be carried out by it.
(d) The authorized, issued and outstanding capital stock of the
Company
is as set forth in the Final
Memorandum. All of the issued shares of
capital stock of the Company
have been duly authorized and validly issued
and are fully paid and
nonassessable; and none of the outstanding shares
of capital stock of the
Company was issued in violation of the preemptive
or other similar rights of
any security holder of the Company.
(e) Each subsidiary of the Company has been duly incorporated,
is
validly existing as a
corporation in good standing under the laws of the
jurisdiction of its
incorporation, has the corporate power and authority
to own its property and to
conduct its business as described in the Final
Memorandum and is duly
qualified to transact business and is in good
standing in each
jurisdiction in which the conduct of its business or its
ownership or leasing of
property requires such qualification, except to
the extent that the failure
to be so qualified or be in good
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standing would not have a
Material Adverse Effect; all of the issued
shares of capital stock or
other equity interests of each subsidiary of
the Company have been duly
and validly authorized and issued, are fully
paid and non-assessable,
and, except for any encumbrance pursuant to
(i)(A) the Credit Agreement
between the Company and SouthTrust Bank, dated
June 27, 2001 (as
subsequently amended) as of the date hereof with respect
to Movie Gallery or (B) the
Credit Agreement between Hollywood and other
parties named therein dated
January 16, 2003 (as subsequently amended)
with respect to Hollywood
and (iii) the Credit Agreement to be entered
into as of the Closing Date
between the Company, Wachovia Bank, N.A., and
the other parties to be
named therein (collectively, the "Senior Financing
Documents"), are owned
directly or through wholly-owned subsidiaries by
the Company, free and clear
of all liens, encumbrances, equities or
claims.
(f) No subsidiary of the Company is prohibited, directly or
indirectly,
from paying any dividends to
the Company, from making any other
distribution on such
subsidiary's capital stock, from repaying to the
Company any loans or
advances to such subsidiary from the Company or from
transferring any of such
subsidiary's property or assets to the Company or
any other subsidiary of the
Company, except as provided by applicable laws
or regulations, the Senior
Financing Documents, the Indenture or as
disclosed in the Final
Memorandum.
(g) Ernst & Young LLP, who has certified the financial
statements
included in the Final
Memorandum with respect to the Company and delivered
its report with respect to
such audited financial statements in the Final
Memorandum, is, to the
knowledge of the Company, an independent registered
public accounting firm with
respect to the Company within the meaning of
the Securities Act and the
applicable rules and regulations thereunder.
PricewaterhouseCoopers LLP,
who has certified the financial statements
included in the Final
Memorandum with respect to Hollywood and delivered
its report with respect to
such audited financial statements in the Final
Memorandum, is, to the
knowledge of the Company, an independent registered
public accounting firm with
respect to Hollywood within the meaning of the
Securities Act and the
applicable rules and regulations thereunder.
(h) The financial statements (including the notes thereto) of
the
Company and its consolidated
subsidiaries and Hollywood and its
consolidated subsidiaries in
the Final Memorandum fairly present the
financial position, results
of operations, cash flows and changes in
stockholders' equity of the
Company and its consolidated subsidiaries and
Hollywood and its
consolidated subsidiaries, as applicable, as of the
dates and for the periods
specified therein; such financial statements
have been prepared in
accordance with generally accepted accounting
principles consistently
applied throughout the periods involved (except as
otherwise expressly
disclosed in the notes thereto) and comply as to form
with the applicable
accounting requirements of Regulation S-X under the
Securities Act; the
information set forth under the captions "Offering
Memorandum Summary - Summary
Consolidated Financial Data and Other Data -
Movie Gallery", "Summary
Consolidated Financial Data and Other Data -
Hollywood," "Selected
Consolidated Financial Data - Movie Gallery" and
"Selected Consolidated
Financial Data - Hollywood" in the Final Memorandum
has been fairly extracted
from the financial statements of the Company and
its consolidated
subsidiaries and Hollywood and its consolidated
subsidiaries, as applicable,
fairly presents the information included
therein and has been
compiled on a basis consistent with that of the
audited financial statements
included in the Final Memorandum. The pro
forma financial information
in the Final
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Memorandum complies as to
form with the applicable accounting requirements
of Article 11 of Regulation
S-X.
(i) Subsequent to the respective dates as of which information is
given
in the Final Memorandum, (i)
none of the Company and its subsidiaries and
none of Hollywood and its
subsidiaries have incurred any material
liability or obligation,
direct or contingent, or entered into any
material transaction in each
case not in the ordinary course of business;
(ii) the Company has not
purchased any of its outstanding capital stock,
and, except for regular
quarterly dividends on the common stock, par value
$.001 per share of the
Company in amounts per share that are consistent
with past practice, has not
declared, paid or otherwise made any dividend
or distribution of any kind
on any class of its capital stock; and (iii)
there has not been any
material change in the capital stock, short-term
debt or long-term debt of
the Company and its subsidiaries or Hollywood
and its subsidiaries, except
as disclosed in the Final Memorandum.
(j) The Company and each of its subsidiaries and Hollywood and each
of
its subsidiaries maintain a
system of internal accounting controls
sufficient to provide
reasonable assurances that (i) transactions are
executed in accordance with
management's general or specific
authorizations; (ii)
transactions are recorded as necessary to permit
preparation of financial
statements in conformity with generally accepted
accounting principles and to
maintain asset accountability; (iii) access
to assets is permitted only
in accordance with management's general or
specific authorization; and
(iv) the recorded accountability for assets is
compared with the existing
assets at reasonable intervals and appropriate
action is taken with respect
to any differences.
(k) The Company and Hollywood are subject to and in full compliance
with
the reporting requirements
of Section 13 or Section 15(d) of the
Securities Exchange Act of
1934, as amended (the "Exchange Act"), except
for failures to file current
reports on Form 8-K by Hollywood. The reports
on SEC Form 10-K filed most
recently by the Company and Hollywood, at the
time they were filed with
the Commission complied in all material respects
with the requirements of the
Exchange Act and the rules and regulations of
the Commission promulgated
thereunder and, when read together with the
other information in the
Final Memorandum, at the date of the Final
Memorandum and as of the
Closing Date, do not and will not include an
untrue statement of a
material fact or omit to state a material fact
required to be stated
therein or necessary to make the statements therein,
in the light of the
circumstances under which they were made, not
misleading.
(l) This Agreement has been duly authorized, executed and delivered
by
the Company and each
Guarantor.
(m) The Indenture and the Registration Rights Agreement have been
duly
authorized by the Company
and each Guarantor and, on the Closing Date,
will have been duly executed
and delivered by the Company and each
Guarantor, and will
constitute the legal, valid and binding obligations of
the Company and each
Guarantor, enforceable against the Company and each
Guarantor in accordance with
their respective terms, except as the
enforcement thereof may be
limited by bankruptcy, insolvency,
reorganization, moratorium
or similar laws affecting enforcement of
creditors' rights generally
and except as enforcement
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thereof is subject to
general principles of equity; and the
Indenture and the
Registration Rights Agreement will conform to the
description thereof in the
Final Memorandum and will be
substantially in the form
previously delivered to you.
(n) The Indenture will conform to the requirements of the Trust
Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and to the
rules and regulations of the
Securities and Exchange Commission (the
"Commission") applicable to
an indenture that is qualified thereunder.
(o) The Notes have been duly authorized and, on the Closing Date,
when
executed and authenticated
in the manner provided for in the Indenture and
delivered to and paid for by
the Initial Purchasers as provided in this
Agreement, will constitute
the legal, valid and binding obligations of the
Company, enforceable against
the Company in accordance with their terms,
except as the enforcement
thereof may be limited by bankruptcy,
insolvency, reorganization,
moratorium or similar laws affecting
enforcement of creditors'
rights generally and except as enforcement
thereof is subject to
general principles of equity, and will be entitled
to the benefits of the
Indenture and the Registration Rights Agreement;
the Guarantees have been
duly authorized and, on the Closing Date, upon
the due issuance and
delivery of the related Notes and the due endorsement
of the Guarantees thereon,
will have been duly executed, endorsed and
delivered and will
constitute valid and legally binding obligations of
each of the Guarantors,
except as the enforcement thereof may be limited
by bankruptcy, insolvency,
reorganization, moratorium or similar laws
affecting enforcement of
creditors' rights generally and except as
enforcement thereof is
subject to general principles of equity, and will
be entitled to the benefits
of the Indenture; the Exchange Notes (as
defined in the Registration
Rights Agreement) have been duly authorized
and, when executed and
authenticated in the manner provided for in the
Registration Rights
Agreement and the Indenture, will constitute the
legal, valid and binding
obligations of the Company, enforceable against
the Company in accordance
with their terms, except as the enforcement
thereof may be limited by
bankruptcy, insolvency, reorganization,
moratorium or similar laws
affecting enforcement of creditors' rights
generally and except as
enforcement thereof is subject to general
principles of equity, and
will be entitled to the benefits of the
Indenture and the
Registration Rights Agreement; and the Notes and the
Exchange Notes will conform
to the descriptions thereof in the Final
Memorandum.
(p) The execution, delivery and performance by the Company and
each
Guarantor of this Agreement
and the other Transaction Documents, the
issuance and sale of the
Notes and the compliance by the Company and each
Guarantor with all of the
provisions of the Notes, the Indenture, the
Registration Rights
Agreement and this Agreement and the consummation of
the transactions
contemplated hereby and thereby will not (i) conflict
with, result in a breach or
violation of, or constitute a default under,
any indenture, mortgage,
deed of trust or loan agreement, stockholders'
agreement or any other
agreement or instrument to which the Company or any
of its subsidiaries or any
other Guarantor is a party or by which the
Company or any of its
subsidiaries or any other Guarantor is bound or any
of their respective
properties are subject, except for such conflicts,
breaches, violations or
defaults that could not have a Material Adverse
Effect, or (ii) with the
certificate of incorporation or bylaws of the
Company or any of its
subsidiaries or any other Guarantor, or any statute,
rule or regulation or any
judgment, order or decree of any governmental
authority or court or any
arbitrator
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applicable to the Company or
any of its subsidiaries or any other
Guarantor, or (iii) require
the consent, approval, authorization, order,
registration or filing or
qualification with, any governmental authority
or court, or body or
arbitrator having jurisdiction over the Company or
any of its subsidiaries or
any other Guarantor, except such as may be
required by the securities
or Blue Sky laws of the various states in
connection with the offer or
sale of the Notes and by Federal and state
securities laws with respect
to the obligations of the Company and the
Guarantors under the
Registration Rights Agreement.
(q) No legal or governmental proceedings or investigations are
pending
or threatened to which the
Company or any of its subsidiaries or Hollywood
or any of its subsidiaries
is a party or to which any of the properties of
the Company or any of its
subsidiaries or Hollywood or any of its
subsidiaries is subject,
other than proceedings accurately described in
the Preliminary Memorandum
and the Final Memorandum and such proceedings
or investigations that could
not, singly or in the aggregate, result in a
Material Adverse Effect.
(r) Except as disclosed in reports filed under the Exchange Act by
Movie
Gallery or Hollywood, there
are no material relationships, direct or
indirect, between or among
the Company or Hollywood or any of their
subsidiaries, on the one
hand, and the respective directors, officers,
stockholders, customers or
suppliers of the Company or any of its
subsidiaries on the other
hand, that would be required by the Securities
Act to be disclosed in a
prospectus were the Notes being issued and sold
in a public offering
registered on Form S-1 under the Securities Act that
are not so disclosed in the
Preliminary Memorandum and Final Memorandum;
and there are no contracts
or other documents (other than employment
agreements) that would be
required by the Securities Act to be disclosed
in a prospectus were the
Notes being issued and sold in a public offering
registered on Form S-1 under
the Securities Act that are not so disclosed
in the Preliminary
Memorandum and Final Memorandum.
(s) Each of the Company and each Guarantor is not now nor after
giving
effect to the issuance of
the Notes and the execution, delivery and
performance of the
Transaction Documents and the consummation of the
transactions contemplated
thereby or described in the Preliminary
Memorandum or the Final
Memorandum, will be (i) insolvent, (ii) left with
unreasonably small capital
with which to engage in its anticipated
business or (iii) incurring
debts or other obligations beyond its ability
to pay such debts or
obligations as they become due.
(t) The Company and its Affiliates (as defined in Rule 501(b)
of
Regulation D under the
Securities Act ("Regulation D")) have not
distributed and, prior to
the later of (i) the Closing Date and (ii) the
completion of the
distribution of the Notes, will not distribute any
offering material in
connection with the offering and sale of the Notes
other than the Preliminary
Memorandum, the Final Memorandum or any
amendment or supplement
thereto.
(u) The Company and its subsidiaries and Hollywood and its
subsidiaries
have not sustained, since
the date of the latest respective audited
financial statements
included in the Final Memorandum (exclusive of any
amendment or supplement
thereto), any material loss or interference with
its business or properties
from fire, explosion, flood, accident or other
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calamity, whether or not
covered by insurance, or from any labor dispute
or court or governmental
action, order or decree (whether domestic or
foreign) otherwise than as
set forth in the Final Memorandum (exclusive of
any amendment or supplement
thereto); and, since such date, there has not
occurred any change or
development having a Material Adverse Effect on the
Company or Hollywood or any
of their subsidiaries.
(v) The Company and its subsidiaries and Hollywood and its
subsidiaries
have good and marketable
title in fee simple to all items of real property
and good and marketable
title to all personal property owned by each of
them except as set forth in
the Final Memorandum, free and clear of any
pledge, lien, encumbrance,
security interest or other defect or claim of
any third party, except for
any encumbrance pursuant to the Senior
Financing Documents and for
such defects in title that could not,
individually or in the
aggregate, have a Material Adverse Effect. Any
property leased by the
Company and its subsidiaries is held under valid,
subsisting and enforceable
leases, and there is no default under any such
lease or any other event
that with notice or lapse of time or both would
constitute a default
thereunder, except for defaults that could not,
individually or in the
aggregate, have a Material Adverse Effect.
(w) No "prohibited transaction" (as defined in Section 406 of
the
Employee Retirement Income
Security Act of 1974, as amended, including the
regulations and published
interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue
Code of 1986, as amended from time to time
(the "Code")) or
"accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the
events set forth in Section 4043(c) of ERISA
(other than events with
respect to which the 30-day notice requirement
under Section 4043 of ERISA
has been waived) has occurred, exists or is
reasonably expected to occur
with respect to any employee benefit plan (as
defined in Section 3(3) of
ERISA) which the Company or any of its
subsidiaries maintains,
contributes to or has any obligation to contribute
to, or with respect to which
the Company or any of its subsidiaries or any
other Guarantor has any
material liability, direct or indirect, contingent
or otherwise (a "Plan");
each Plan is in compliance in all material
respects with applicable
law, including ERISA and the Code; none of the
Company or any of its
subsidiaries has incurred or expects to incur
liability under Title IV of
ERISA with respect to the termination of, or
withdrawal from, any Plan;
and each Plan that is intended to be qualified
under Section 401(a) of the
Code is so qualified in all material respects
and nothing has occurred,
whether by action or failure to act, which could
reasonably be expected to
cause the loss of such qualification.
(x) Except as disclosed in each Memorandum, no labor dispute with
the
employees of the Company or
any of its subsidiaries or Hollywood or any of
its subsidiaries exists, is
imminent or is threatened, and the senior
officers of the Company and
its subsidiaries are not aware of any
existing, imminent or
threatened labor disturbance by the employees of any
of their respective
principal suppliers, manufacturers, customers or
contractors, which, in
either case, could reasonably be expected to result
in a Material Adverse
Effect.
(y) No proceedings for the merger, consolidation, liquidation
or
dissolution of the Company
or any Guarantor and or the sale of all or a
material part of the assets
of the Company and its subsidiaries or any
material acquisition by the
Company or any Guarantor are pending or
contemplated, except as set
forth in the Final Memorandum.
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(z) The Company and each of its subsidiaries and Hollywood and each
of
its subsidiaries owns or
otherwise possesses adequate rights to use all
material patents,
trademarks, service marks, trade names and copyrights,
all applications and
registrations for each of the foregoing, and all
other material proprietary
rights and confidential information necessary
to conduct their respective
businesses as currently conducted; none of the
Company or any of its
subsidiaries nor Hollywood and its subsidiaries has
received any notice, or is
otherwise aware, of any infringement of or
conflict with the rights of
any third party with respect to any of the
foregoing, except for
failures to possess such rights and for any such
infringement or conflicts
that could not, individually or in the
aggregate, have a Material
Adverse Effect.
(aa) The Company and each of its subsidiaries and Hollywood and
each of
its subsidiaries is insured
by insurers of recognized financial
responsibility against such
losses and risks and in such amounts and with
such deductibles as are
prudent in the business in which it is engaged;
and none of the Company or
any of its subsidiaries or Hollywood and its
subsidiaries has any reason
to believe that it will not be able to renew
its existing insurance
coverage as and when such coverage expires or to
obtain similar coverage from
similar insurers as may be necessary to
continue their respective
businesses at a cost that would not have a
Material Adverse Effect.
(bb) The Company and each of its subsidiaries and Hollywood and
its
subsidiaries are in
compliance with all laws, ordinances, regulations and
orders applicable to the
Company and its subsidiaries or to Hollywood and
its subsidiaries, as the
case may be, and their respective businesses, and
none of the Company or any
of its subsidiaries nor Hollywood and any of
its subsidiaries has
received any notice to the contrary; and each of the
Company and its subsidiaries
and Hollywood and its subsidiaries possesses
all certificates,
authorizations, permits, licenses, approvals, orders and
franchises (collectively,
"Licenses") necessary to conduct their
respective businesses in the
manner and to the full extent now operated or
proposed to be operated as
described in the Final Memorandum, and are in
compliance with the
Licenses, in each case issued by the appropriate
federal, state, local or
foreign governmental or regulatory authorities
(collectively, the
"Agencies"), and each other federal, state and local
agency, the regulations of
which are applicable to the businesses or
products of the Company and
its subsidiaries or Hollywood and its
subsidiaries, except where
the failure to so comply with such laws,
ordinances, regulations or
orders or to possess such Licenses could not
have a Material Adverse
Effect. The Licenses are in full force and effect
and no proceeding has been
instituted or, to the Company's or Hollywood's
knowledge, is threatened or
contemplated which in any manner affects or
calls into question the
validity or effectiveness thereof, except for such
failures to be in effect and
such proceedings as could not have a Material
Adverse Effect. The Licenses
contain no restrictions, except for
restrictions applicable to
the home video, video game and tanning salon
industries generally, that
are materially burdensome to the Company or
Hollywood.
(cc) There is and has been no failure on the part of the Company
or
Hollywood or any of their
respective directors or officers, in their
capacities as such, to
comply with any provision of the Sarbanes Oxley Act
of 2002 and the rules and
regulations promulgated in connection therewith
(the "Sarbanes Oxley Act"),
including Section 402 related to loans and
Sections 302 and 906 related
to certifications.
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(dd) (i) The Company and each of its subsidiaries and Hollywood and
each
of its subsidiaries is and
has been in compliance with all applicable
laws, statutes, ordinances,
rules, regulations, orders, judgments,
decisions, decrees,
standards, and requirements relating to: human health
and safety; pollution;
management, disposal or release of any chemical
substance, product or waste;
and protection, cleanup, remediation or
corrective action relating
to the environment or natural resources
("Environmental Law");
(ii) The Company and each of its subsidiaries and Hollywood and
each
of its
subsidiaries has obtained and is in compliance with the
conditions
of all
permits, authorizations, licenses, approvals and variances
necessary
under any Environmental Law for the continued conduct in the
manner now
conducted of their respective businesses ("Environmental
Permits");
(iii) To the knowledge of the Company, there are no past or
present
conditions
or circumstances, including but not limited to pending changes
in any
Environmental Law or Environmental Permits, that are likely to
interfere
with the conduct of the business of the Company and its
subsidiaries or Hollywood and each of its subsidiaries in the
manner now
conducted
or which would interfere with compliance with any Environmental
Law or
Environmental Permits; and
(iv) To the knowledge of the Company, there are no past or
present
conditions
or circumstances at, or arising out of, their respective
businesses, assets and properties of the Company and each of
its
subsidiaries or Hollywood and each of its subsidiaries or any
business,
assets or
properties formerly leased, operated or owned by the Company or
any of its
subsidiaries, including but not limited to on-site or off-site
disposal
or release of any chemical substance, product or waste, which
may
give rise
to: (i) liabilities or obligations for any cleanup, remediation
or
corrective action under any Environmental Law; (ii) claims
arising
under any
Environmental Law for personal injury, property damage, or
damage to
natural resources; (iii) liabilities or obligations incurred by
the
Company or its subsidiaries to comply with any Environmental Law;
or
(iv) fines
or penalties arising under any Environmental Law;
except in each case for any noncompliance
or conditions or circumstances that,
singly or in the aggregate, could not
result in a Material Adverse Effect.
(ee) Neither the Company nor any Guarantor nor any subsidiary of
the
Company or any Guarantor is
in violation of its certificate of
incorporation, bylaws or
other organizational document, and no default or
breach exists, and no event
has occurred that, with notice or lapse of
time or both, would
constitute a default in the due performance and
observation of any term,
covenant or condition of any indenture, mortgage,
deed of trust, lease, loan
agreement, stockholders' agreement or any other
agreement or instrument to
which the Company or any Guarantor or any
subsidiary of the Company or
any Guarantor is a party or by which the
Company or any Guarantor or
any of subsidiary of the Company or any
Guarantor is bound or to
which any of their respective properties are
subject, except for such
breaches, defaults or events, that could not,
individually or in the
aggregate, have a Material Adverse Effect.
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<PAGE>
(ff) The Company and each of its subsidiaries and the Guarantor and
each
of their subsidiaries has
filed all foreign, federal, state and local tax
returns that are required to
be filed or has requested extensions thereof
and has paid all taxes
required to be paid by it and any other assessment,
fine or penalty levied
against it, to the extent that any of the foregoing
is due and payable, except
for any such assessment, fine or penalty that
is currently being contested
in good faith and for which adequate reserves
are retained, and except for
such filings and payments, the failure of
which to have been made,
could not, individually or in the aggregate, have
a Material Adverse
Effect.
(gg) Except as disclosed in the Final Memorandum, there are no
contracts, agreements or
understandings between the Company or any of its
subsidiaries and any person
granting such person the right to require the
Company or any of its
subsidiaries to file a registration statement under
the Securities Act or to
require the Company to include any securities
held by any person in any
registration statement filed by the Company
under the Securities
Act.
(hh) Neither the
Company nor any Guarantor is, nor after giving effect
to the offering and sale of
the Notes and the application of the proceeds
thereof as described in the
Final Memorandum will be, an "investment
company", or a company
"controlled" by an "investment company", within the
meaning of the Investment
Company Act of 1940, as amended (the "Investment
Company Act").
(ii) Neither the Company nor any of its subsidiaries nor any of
their
respective Affiliates, nor
any person acting on behalf of the Company or
any of its subsidiaries has,
directly or indirectly, sold, offered for
sale, solicited any offer to
buy or otherwise negotiated in respect of, or
will sell, offer for sale,
solicit any offer to buy or otherwise negotiate
in respect of, or
distributed any offering memoranda or similar materials
with respect to, any
security which offer or sale would be integrated with
the sale of the Notes and
the Guarantees in a manner that would require
the offer or sale of the
Notes and the Guarantees to be registered under
the 1933 Act (it being
understood that no representation or warranty is
made by the Company and the
Guarantors as to the Initial Purchasers and
their agents). Within the
last six months, neither the Company nor anyone
acting on its behalf has
distributed to investors or potential investors
any offering materials
relating to an offering of securities, other than
the Preliminary
Memorandum.
(jj) None of the Company or any of its Affiliates has, directly
or
through any person acting on
its or their behalf (other than the Initial
Purchasers, as to which no
statement is made), offered, solicited offers
to buy or sold the Notes by
any form of general solicitation or general
advertising (within the
meaning of Regulation D) or in any manner
involving a public offering
within the meaning of Section 4(2) of the
Securities Act.
(kk) None of the Company, any of its Affiliates, nor any person
acting
on its or their behalf
(other than the Initial Purchasers, as to which no
statement is made), has
engaged in any directed selling efforts with
respect to the Notes, and
each of them has complied with the offering
restrictions requirement of
Regulation S under the Securities Act
("Regulation S"). Terms used
in this paragraph have the meanings given to
them by Regulation S.
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<PAGE>
(ll) None of the Company or any of its Affiliates has taken,
directly or
indirectly, any action
designed to cause or result in, or which has
constituted or which might
reasonably be expected to cause or result in,
stabilization or
manipulation of the price of any security of the Company
to facilitate the sale or
resale of the Notes; nor has the Company or any
of its Affiliates paid or
agreed to pay to any person any compensation for
soliciting another to
purchase any securities of the Company (except as
contemplated by this
Agreement).
(mm) The Notes satisfy the eligibility requirements of Rule
144A(d)(3)
under the Securities
Act.
(nn) Assuming the accuracy of the representations and warranties of
the
Initial Purchasers in
Section 3 hereof and compliance by the Initial
Purchasers with the
procedures set forth in Section 3 hereof, it is not
necessary in connection with
the offer, sale and delivery of the Notes to
the Initial Purchasers in
the manner contemplated by this Agreement and
disclosed in the Preliminary
Memorandum and the Final Memorandum to
register the Notes or the
related Guarantees under the Securities Act or
to qualify the Indenture
under the Trust Indenture Act.
(oo) None of the Transactions (including, without limitation, the
use of
proceeds from the sale of
the Notes) will violate or result in a violation
of Section 7 of the Exchange
Act or any regulation promulgated thereunder,
including, without
limitation, Regulations T, U and X of the Board of
Governors of the Federal
Reserve System.
(pp) There are, and during the last 12 months there have been,
no
material disputes between
the Company and its subsidiaries or Hollywood
and its subsidiaries and any
of their respective ten largest suppliers (as
measured by dollar volume of
goods purchased by the Company and its
subsidiaries or Hollywood
and its subsidiaries, as applicable) ("Material
Suppliers"). The Company's
and Hollywood's relations with their Material
Suppliers are, to the
knowledge of the Company and Hollywood, good, and
the Company and Hollywood
have received no notice, and are not otherwise
aware, of any anticipated
dispute with any of their respective Material
Suppliers, or that any
Material Supplier intends to cease or reduce its
supply to the Company or
Hollywood, as applicable.
(qq) The relationship of the Company or Holl
